My father and I own a vacation home as a 50/50 limited partnership established as a trust. In his will, when he dies I inherit his 50% making me the 100% owner. I am trying to figure out what happens tax wise when he dies. Do I have to pay taxes on the value of the portion that he wills to me, or do I acquire it without taxation since I was already a limited partner in the property/trust?

When your father dies, his share of the partnership will enter his estate. The estate may be taxed on the value of all of its assets (depending on total asset value, extent of taxable gifts he made during his lifetime, etc.) After the estate pays any death taxes due, his share of the partnership will pass to you. You will not pay any tax upon receipt. Your basis in the entire property will consist of the basis of your 50% (as adjusted over the years for improvements and depreciation, etc.) and presumably, a stepped-up basis for your father's half (usually, as of the date of death). Of course, this all changes if he dies in 2010.

There are some subtleties in the above scenario. If there is anything that isn't clear, just ask again.